The current gold rush in China is also extending to platinum, gold’s more expensive cousin, according to the latest trade data on platinum group metal imports.
Net platinum inflows into China hit their highest levels in two and a half years, according to an HSBC Holdings PLC (LON:HSBA) research note from Monday. Palladium, another platinum group metal, used along with platinum in automobile parts, hit an eight-month high for September.
China’s net imports of platinum rose by 11 percent, to hit almost 70 metric tons for the first three quarters in 2013, higher than the 62 metric tons from the same period last year.
A platinum price decline from $1,540/oz in September to $1,400/oz near the start of October could have prompted stronger physical demand, which in turn could stabilize prices, according to the note.
“Imports dipped a little in August, but they have since recovered and hit the highs we saw yesterday,” HSBC precious metals analyst Howard Wen told International Business Times.
Wen cited strong demand for platinum jewelry in China, which he put at 2 million ounces in 2011, compared to demand for platinum in automobiles, which he placed at 105,000 ounces in 2011. China is the world’s largest consumer of platinum jewelry.
Globally, industrial uses in automobiles account for 40 percent of platinum demand, while jewelry is a close second at about 35 percent of demand, he said.
“It’s an indication of the strong physical demand in China,” said Wen. “Platinum prices have been dragged lower this year due to gold’s decline, and so with the rush in [physical] demand for gold, we see the same story for platinum.”
Platinum contracts on the Shanghai Gold Exchange have seen elevated trading levels recently, according to a monthly precious metals report from CPM Group, from Oct. 10.
Inventories and delivery notices on the New York’s Nymex commodities exchange also hit records in September and October, but this could indicate large selling of physical platinum from investment funds, according to the report.
Noncommercial market participants, meanwhile, may be seeking bargains on the platinum market.
Barclays PLC (LON:BARC) also noted strong platinum exports to China, with exports from Switzerland more than tripling to 6,000 ounces in September.
“Shipments to Hong Kong remained strong at 47,600 oz, supporting the healthy growth trends across the jewelry market,” added Barclays analysts in a note on Tuesday.
Underlying auto production in China stayed strong this quarter, analysts stated. The China Association of Automobile Manufacturers also reported a 20 percent boost in vehicle sales in September.
Platinum exchange-traded fund holdings have hit record highs lately, as European and U.S. investors sold off platinum, while South African investors added to investment fund holdings. South Africa is a major producer of platinum.
Palladium, platinum’s cheaper sister metal, saw Chinese imports fall by 5 percent for the year to date. In August 2013, China exported less than 1 metric ton each of platinum and palladium.